REGISTRATION OF MORTGAGES
Panama naval mortgages are widely used in international financial circles and credit institutions of the world. The current regulations allow for preliminary registration to be carried out before the Public Registry office in Panama through local attorneys.
Under Panama Law the registration of a vessel mortgage requires that the mortgage be dated after the Provisional Navigation License has been issued.
When a purchase money mortgage is involved, documents may have the same date.
In accordance with article 1515 of the commercial code, a vessel mortgage must be executed or acknowledged before a Notary Public and the signature of the Notary must be certified by a Panamanian consul.
The vessel mortgage deed must contain:
- The name, civil status, occupation and domicile of the mortgagor and the mortgagee.
- The amount which the mortgage guarantees and the sum or sums to which the lien applies for the payment of costs and interest. The rate of interest being clearly stated.
- The date of payment of the Capital, the interest and any other provisions of the contracting parties may desire concerning interest, insurance and the schedule of the accessories of the ship, which are covered in the mortgage.
- The name and radio Call Letters which distinguish the ship. A complete description of the vessel, its registration data at the public registry office and the number and expiration date of the navigational Patent.
- The appraisal or price which is assigned to the ship and which would serve as the basis for an action in case that such action should become necessary.
- The proportionate value or amount assigned to each vessel in the events that there are two or more vessels covered by the same mortgage.
An important consideration in the growth of the fleet has been the confidence generated in the international financial community by the security of mortgages over Panamanian registered vessels.
Among the salient features of ship mortgages over Panamanian registered vessels, we can mention:
- A ship mortgage may be granted to secure all kind of lawful obligations, including future obligations, and obligations subject to precedent conditions. A mortgage may be first registered in Panama upon preliminary registration of title, either abroad through a Panamanian Consulate with maritime responsibilities, or in Panama through the Public Registry. Such preliminary registration will be legally binding for six months and thus, be effective against third parties from the date of preliminary registration.
- The ship mortgage contract may be executed in any language and should be in writing, whether in private or authentic form, or may be constituted in accordance with the laws of the place of execution.
- A mortgage may be preliminarily registered thereafter in Panama or abroad and such preliminary registration will be legally binding for a period of six months. During this period, the mortgage should be filed for registration at the Public Registry in Panama. Upon registration thereof, it will operate retroactively from the date of preliminary registration.
Ship mortgages of vessels under Panamanian Flag must be recorded at the Ships Section of the Public Registry Office of the Republic of Panama.
1. Preliminary Registration
In order to secure the mortgage and property of the vessel, a preliminary registration of Bill of Sale and mortgage is done through Panamanian Consulates. The preliminary Registration form is completed at the Consular Office and is sent via fax to the Public Registry Office.
This preliminary registration has a six (6) months validity, during which the permanent registration must be executed through a lawyer or law firm in Panama.
Mortgages can be executed in any language, must be in writing and either in public or private document.
For legalization purposes, a Panamanian consul has to state the authenticity of the signatures of both parties, and also that the persons signing the deed have the authority to act on behalf of the mortgagor and the mortgagee, respectively.
If any or both parties is a Panamanian registered corporation, it must be in good standing, and a copy of the annual franchise tax receipt must be furnished.
The Bill of Sale or Title of ownership must be registered so that the registration of as mortgage can be made. Nevertheless, the Bill of Sale can be registered simultaneously with the document of mortgage.
The registration fees payable to the National Treasury of Panama is based on a rate of USD$0.12 per net ton up to a maximum fee of USD$ 600.00.
The fees for a preliminary registration of a mortgage will be: USD$450.00 for the first two million dollars (USD$2,000,000.00) of the amount of the mortgage, plus USD$150.00 for each extra million with a maximum registration fee of USD$1200.00.
The cost f registration of a mortgage also involves translation fees, notarial fees, and office expenses and fees, which depend on the length of the document of mortgage.
Cancellation of Ship Mortgages
Ship mortgages can be discharged or cancelled by registering a deed or document of release of mortgage, issued by the mortgagee. This document has to be duly legalized in the same manner as the mortgage deed was legalized. After this, the document has to be sent to a lawyer or law firm in Panama, for registration, upon which the ship may be considered free of mortgage.
Ship Mortgages can also be preliminary cancelled at the Panamanian Merchant Marine Consulates and said registration will be valid during six (6) months, during which period the final registration of the cancellation of mortgage must be effected.